Abuse of Process: Federal Court of Appeal Clarifies Application in PM(NOC) Proceedings

In the recent decision of Janssen Inc. v. Apotex Inc., the Canadian Federal Court of Appeal (“FCA”) declared a subsequent action brought under the Patented Medicines (Notice of Compliance) Regulations (the “Regulations”) to be an abuse of process because the generic defendant could have raised allegations of patent invalidity in earlier proceedings but chose not to do so. The FCA’s decision serves as a reminder that patent litigants should put all their arguments forward at first instance – even in Notices of Allegation (“NOAs”) served under the Regulations.

Background

Janssen is the owner of Canadian Patent No. 2,655,335 (“335 Patent”), which has claims related to a dosing regime of paliperidone palmitate (INVEGA SUSTENNA®) for treating schizophrenia. Apotex filed two Abbreviated New Drug Submissions (“ANDS1” and “ANDS2”), each pertaining to proposed paliperidone injection product(s) but with different dosage strengths.

Apotex served Janssen with an NOA in respect of the 335 Patent and ANDS1, alleging grounds of non-infringement but not patent invalidity. Janssen then commenced an action against Apotex pursuant to the Regulations (“First Action”). As we discussed in our earlier blog post, on summary trial, the Federal Court found that Apotex’s proposed product would infringe claims of the 335 Patent through inducement. This decision is under a pending appeal.

Apotex then served new NOAs regarding the 335 Patent, some in respect of the ANDS1 (which was at issue in the First Action) and some in respect of ANDS2. The new NOAs allege invalidity of the 335 Patent but not non-infringement. A second set of actions in respect of the new NOAs were then commenced (collectively, “Second Actions”).

Federal Court Decision

Janssen sought summary judgment in the Second Actions arguing, among other things, that the actions were an abuse of process because Apotex could have made allegations of invalidity in the earlier NOA underlying the First Action. The Federal Court dismissed Janssen’s motion finding that:

• The Regulations do not expressly provide that a generic manufacturer can only serve one NOA in respect of each patent.
• The Regulations make a clear distinction between allegations of invalidity and allegations of non-infringement but make no distinction between individual grounds of invalidity. Consequently, serving one NOA in respect of non-infringement and a second NOA in respect of invalidity would not be abusive. However, serving one NOA on some grounds of invalidity and then serving a second NOA in order to pursue different grounds of invalidity would “almost certainly be abusive of the process set out under the Regulations.”
• ANDS2 is wholly distinct from ANDS1. Abuse of process arguments based on an NOA served in respect of ANDS1 are “inapplicable” to the Second Actions involving ANDS2.

Federal Court of Appeal: All Allegations Must Be Made at First Instance

• A principle aim of the 2017 amendments to the Regulations was to avoid multiple proceedings concerning patents on medicines.
• Actions under the Regulations, following the 2017 amendments, are to proceed and have effect much like a normal patent action.
• Absent special circumstances, a defendant in a normal patent infringement action that defends itself on the basis of non-infringement alone would not be allowed to maintain a separate impeachment action concerning the same patent – the second action would typically constitute an abuse of process.
• It was intended that a generic manufacturer should raise all of its allegations in its NOA and should not “keep some in reserve in the event that it is not initially successful.”
• The fact that an appeal remains pending in the First Action does not preclude a finding that the Second Actions are an abuse of process.
• Abuse of process doctrine is flexible and can apply in respect of the Second Actions pertaining to ANDS2 (which has a different dosage strength than ANDS1).

Key Takeaways

The decision reinforces that patent litigants must allege all possible issues and defences of infringement and invalidity at first instance, including in NOAs. The courts have broad discretion to prevent re-litigation of claims and case splitting – even in proceedings brought pursuant to the PM(NOC) Regime. Failure to raise an argument at first instance can preclude a litigant’s ability to raise the allegation at a later date.

The Intellectual Property Litigation Group at Aird & Berlis LLP assists clients with issues of patent infringement and validity including proceedings brought pursuant to the PM(NOC) Regulations. Please contact the authors or another member of the group if you have questions or require any assistance with patent matters.